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Understanding Currencies

Kezi supports multi-currency operations, allowing you to transact in any currency while maintaining books in your base currency.

Overview

Currency management includes defining currencies, setting exchange rates, and handling automatic conversion. All financial reports can be viewed in either the transaction currency or your base currency.

Key Concepts

Base Currency

Your company's primary currency, used for:

  • All financial reports
  • Tax calculations
  • Regulatory filings

Foreign Currency

Any currency other than your base currency. Foreign currency transactions are recorded at the exchange rate on the transaction date.

Exchange Rates

The conversion rate between currencies. Kezi maintains:

  • Spot Rates: Daily rates for transaction conversion
  • Historical Rates: Rates used for past transactions (immutable)

Setting Up Currencies

Creating a Currency

  1. Navigate to Settings > Currencies.
  2. Click Create Currency.
  3. Enter:
    • Code: ISO 4217 code (e.g., USD, EUR, IQD)
    • Name: Full name (e.g., "US Dollar")
    • Symbol: Currency symbol (e.g., $, €)
    • Decimal Places: Usually 2 (some currencies use 0 or 3)

Managing Exchange Rates

  1. Navigate to Settings > Currency Rates.
  2. Create rates for each currency pair.
  3. Enter:
    • Base Currency: Your company's currency
    • Foreign Currency: The other currency
    • Rate: How many units of foreign currency equal one base unit
    • Date: When this rate applies

Multi-Currency Transactions

When creating invoices, bills, or payments in foreign currency:

  1. Select the foreign currency
  2. Current exchange rate is applied automatically
  3. System records both original and converted amounts

Currency Gain/Loss

When exchange rates change between transaction and payment dates:

  • Realized Gain/Loss: Recorded when payment is received/made
  • Unrealized Gain/Loss: Calculated during revaluation for open items

See Currency Revaluation for details.

Best Practices

  1. Update Rates Regularly: Keep exchange rates current
  2. Document Rate Sources: Note where rates come from
  3. Revalue Monthly: Run revaluation at period end
  4. Review Variances: Monitor currency gain/loss accounts